Former Prime Minister Paul Keating endorsed proposed government changes to the capital gains tax discount on Thursday [1].
The endorsement from a former leader provides significant political weight to a contentious tax reform aimed at cooling the residential property market. By targeting the tax advantages of property investment, the government seeks to reduce the financial barriers preventing new buyers from entering the market.
Keating said the proposed measures are "structurally sound" [1, 2]. He said the reforms are necessary to address long-standing economic imbalances that have skewed the Australian housing market in favor of existing owners over prospective buyers.
According to Keating, the current policy framework is a legacy of the John Howard and Peter Costello era [1, 2]. He said the government is "seeking to arrest" a measure from that period that has made "housing unaffordable for a whole generation" [1].
The former Prime Minister linked the persistence of high property prices to the specific tax discounts established during the Howard-Costello years. He said these incentives encouraged speculative investment, effectively turning homes into financial assets rather than shelters.
By supporting the current administration's shift, Keating is positioning the reform as a correction of a historical error. He said the changes are a vital step in ensuring that the tax system does not continue to subsidize the inflation of home prices at the expense of young Australians [1, 2].
“"structurally sound"”
The support from Paul Keating signals a strategic alignment between current policy goals and the economic philosophies of a previous Labor era. By framing the capital gains tax discount as a specific failure of the Howard-Costello government, the current administration can present the reform not as a new tax burden, but as a necessary correction to restore generational equity in the housing market.
